August 8, 2018

August 8, 2018

Earnings roulette continues to be the primary driver of significant price moves among individual stocks, including the usual assortment of big gaps to the upside and the downside. There are, however, some exceptions. Most notably, Tesla (TSLA), which rallied sharply as a news-mover after CEO Elon Musk tweeted that he was considering taking the company private at $420 a share, and that he had “funding secured.”

That sent the stock on a tear that got as high as 387.46, within 1% of its all-time high, before it backed down to close about eight points lower. The whole affair was one of the more bizarre dramas I’ve ever seen play out in the stock market in my 27-year career. News that the SEC was inquiring about Musk’s comments sent the stock back to the downside today on heavy volume.

The technical reality of TSLA, from my perspective, however, is that it was a bottom-fishing buyable gap-up (BFBGU) on Friday of last week as I tweeted at the time when it set an intraday low at 323.16. From there it was up, up and away, and from a technical perspective, yesterday’s move was just a continuation of the original BFBGU long entry point. Now it’s just extended from that original buy zone, regardless of the news noise.

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